Published January 2023 on Spotfiy

781: Peter Zeihan | Mapping the Collapse of Globalization

1. Introduction

China's Disintegration:Peter Zeihan predicts that China will disintegrate as a political entity within a decade or two, and an economic entity within a decade due to its low birth rate and other factors.+
The Future of Global Trade:Peter discusses the potential collapse of the interconnected global trade system, covering topics such as trade, shipping, demographic collapse, petroleum, China, green energy batteries, and more.+

2. Globalization's Impact

Globalization's Effects:Peter explains how globalization has affected the world and its demographics. The commitment of the US to the Cold War led to a world where anyone can trade with anyone, anywhere, at any time. This created a world where people could industrialize together and change their personal habits, leading to fewer children and an aging population.+
The Fragility of Globalization:Peter explains how the pandemic has exposed the fragility of the globalization system, and predicts a collapse in many categories in the 2020s. He also discusses the challenges of replacing the aging population and the limitations of robots in solving this issue.+
Shipping's Global Impact:Peter explains how international shipping impacts global trade and food production. He highlights the importance of maritime trade for East Asian manufacturing and the transportation of oil. The conversation also touches on the potential consequences of disruptions in the shipping industry.+

3. Oil Market Split

Splitting the Oil Market:Peter explains how the European plan for an oil export ban has split the oil market into at least three pieces, two Russian and one everything else. This means countries no longer have a vested interest in making sure the oil flows everywhere all the time because we're not all in this together anymore.+
Global Trade Conflict:Peter explains how the US Navy secures shipping routes for other countries and why it's not sustainable. He also talks about the potential for conflict and competition in the global trade industry, and how the US is not equipped to be the global policeman anymore.+

4. China's Naval Capacity

China's Naval Capacity:Peter explains how China's lack of naval capacity limits their ability to project power beyond their coast, making them dependent on resource access and market access in countries that are half a world away. Jordan points out that China's access to Russia is limited and they need to get to Europe and the United States, which can only be done with ships. Peter also discusses China's aircraft carriers and their lack of combat capability.+
Geography and Success:Peter explains how the geography of the United States has given it great economic and defensive potential, with the largest natural transport network and the best waterway network in the world. He compares this to China's geography, which is flood-prone, drought-prone, and has a low productivity rate, making it difficult to unify at home and penetrate out.+

5. China's Demographic Collapse

China's Demographic Collapse:Peter explains how China's rapid urbanization and the one-child policy have led to a demographic collapse, leaving the country with a shortage of young people. This collapse is unprecedented and poses a significant challenge to the Chinese economy, for which there is no economic theory to solve.+
US Immigration Policy:Peter and Jordan discuss the importance of immigration to the US economy and the potential consequences of not meeting immigration targets. They compare the US immigration system to China's and highlight the challenges China faces in attracting skilled migrants.+

6. Sponsors

Personal Training Revolution:Jordan shares his experience with Wrkout, a personal training service that offers virtual and in-person training with world-class trainers. He lost 40 pounds and has a six-pack, and even his 81-year-old mother is hooked on it. Wrkout is like the Airbnb of personal training and can change your life if you let it.+
Building Your Network:Jordan shares his non-cringey, practical exercises for building your network and improving your relationship-building skills. Many of the podcast's guests have subscribed and contributed to the course, making it a smart and valuable resource for anyone looking to become a better connector, colleague, friend, or peer.+

7. China's Migration Challenge

China's Migration Challenge:Peter and Jordan discuss China's history of outward migration and the challenges the country faces in attracting inward migration. They also touch on the Hukou culture and how it contributes to the hollowing out of rural areas.+
Globalization and De-Globalization:Peter explains the two aspects needed for globalization to work and how demographic aging has caused countries to hoard their consumption and produce more locally. He also discusses the vulnerability of global transport breakdowns and how the smartphone industry is both sophisticated and vulnerable.+

8. Supply Chain Shift

Supply Chain Shift:Peter and Jordan discuss the impact of China's unreliable manufacturing partnership on the global supply chain. With a limited labor availability in North America, companies are in a race to find new places to build factories, resulting in increased prices and competition.+
North American Supply Chain:Peter explains how North America is going to create a supply chain system that employs people from the continent that is simpler and shorter with fewer steps, cleaner, uses less energy, and is largely immune to international crises. He also talks about how skilled labor will be leaving other countries and coming to America, and how by the numbers immigration is brilliant.+

9. China's Economic Future

Global Economic Trends:Peter discusses the impact of de-globalization on different countries and how demographics play a role in their economic success. He mentions how Canada and Japan will benefit from their trade deals with the US, while Vietnam is trying to leapfrog China in terms of technological aptitude. Peter also addresses concerns about China's future in the global market.+
China's Disintegration:Peter predicts that China will disintegrate as a political entity within a decade or two, and an economic entity within a decade. He believes that the Northern Zone will turn into a famine-ridden hellscape, and the central government will be desperate to oppress people into unity. Meanwhile, the southern cities from Shanghai on south will be where the value add is, and where foreigners are more exposed.Show transcript +
China's City-States:Peter explains how historically, southern Chinese cities have become independent city-states and interface with foreign countries for technology, finance, and food. Jordan and Peter discuss how China could go back to this model and the challenges they face in maintaining stability.+

10. Fragile Chinese Economy

Fragile Chinese Economy:Peter warns that the Chinese economy is much more fragile than the US economy, and that they are walking on a tightrope between two pickups going 90 down the highway as they go off a cliff into a whirlpool where a meteor is hitting. Any of these things can end it.+
Global Shipping Threats:Peter explains the history of maritime transport and the various security threats that come with it, such as pirates and state pirates. He highlights the importance of insurance policies for shipping and how the cost increases significantly in conflict zones. He also discusses how the US Navy could potentially stop oil flows from the Persian Gulf to the Chinese coast, which would raise the cost of shipping and affect global manufacturing.+

11. Sponsors

Jordan shares his experience with ketones and how it helps with his workouts. He also talks about how Peloton's rowing machine helps him maintain a sustainable fitness routine despite his busy schedule.+

12. Fragility of Supply Chains

Fragility of Global Supply Chains:Jordan and Peter discuss the fragility of global supply chains and how disruptions in one area can have a ripple effect on the entire system. They use the example of oil production to illustrate how a shutdown in one region can lead to long-term consequences.+
Fragile Oil Prices:Peter explains how oil prices are fragile due to the lack of elasticity and how disruptions can mess up the entire system. He also discusses how the location of oil affects the focus of governments on extraction and how it doesn't necessarily make a country a failed state.+
Venezuela's Oil Crisis:Peter explains the current situation in Venezuela's oil industry, the US sanctions, and the potential consequences of lifting them. He also discusses the challenges of rebuilding the country's oil production system and the massive investment required to do so.+

13. Global Energy Crisis

Global Energy Crisis:Peter predicts that if the Middle East becomes unstable again and the US builds a wall around its energy markets, global energy prices could skyrocket to $150-$200 per barrel. This could lead to European countries seeking to colonize oil-rich countries like Venezuela and Libya to secure their own supply. However, Peter warns that this would not be an easy feat, especially with the distribution of weapons in these countries.+
Energy and Electricity:Peter explains the challenges of transitioning from oil to green energy, highlighting the complexity of generating and storing electricity. He also emphasizes that green energy requires a lot more machinery and materials, making it difficult to declare independence from oil-producing countries.+
Green Energy Challenges:Peter explains the challenges of transitioning to green energy due to the lack of production capacity for materials like copper and the limited locations where solar and wind power work well. Nuclear energy is also not a quick fix due to the long time it takes to build and the reliance on Kazakhstan and Russia for uranium.+

14. Lithium and Manufacturing

Rare Earths and Lithium:Peter explains that while rare earths are not a problem, copper and lithium are. Most of the world's lithium comes from Chile and Australia, and copper is primarily from Chile, Russia, and Indonesia. The US doesn't have enough of either to maintain a moderate green buildout, much less global at scale.+
Mexico's Manufacturing Future:Peter Zeihan explains why Mexico is becoming a dominant force in manufacturing and why it needs to collaborate with the US and other countries to continue its growth. He also discusses the challenges Mexico faces in the electronics industry and how Colombia may play a role in its future.+

15. Global Food Crisis

Global Food Supply:Peter warns of a looming global food crisis due to fertilizer shortages, which will lead to significant drops in agricultural output in 2023. Brazil, the world's largest fertilizer importer, is a country to watch. The United States, Canada, Mexico, Colombia, Australia, Japan, and the Brits are predicted to be the biggest winners in the new world order, while China is expected to be the biggest loser.+
Global Challenges:Peter and Jordan discuss the potential for famine in certain parts of the world and the impact it will have on immigration. Peter predicts that skilled labor and people who have the ability to move will all move to places where there aren't going to be these problems. They also discuss the impact of immigration on the United States and how it will change the country's complexion over the next 20 years.+

16. Global Disruption

Peter Zeihan warns that if we can't keep Russia locked down in Ukraine, there will be a direct American-Russian confrontation. He also discusses how containers changed global commerce in a huge way and how the whole system is going to sort of disintegrate.+

17. Outro

Jordan introduces the AI chatbot available on his website and encourages listeners to try it out. He believes it's a game changer and is looking forward to making it even better for listeners to use.+